15 Employees - Jurisdictional or Does It Go to the Merits?

Posted 2:24 PM by Michael Fox

Whether an employer defendant under Title VII has 15 employees can, depending on the circuit in which the case is being tried, be either a factual question that the plaintiff must establish as part of the case on the merits, or a jurisdictional question, which can derail the entire proceeding when raised at any time. Although one gathers perhaps not too keenly, the most recent iteration from New Orleans is that current 5th Circuit precedent makes it a jurisdictional issue. That means that a post-jury verdict by the defendant that the court lacked subject matter jurisdiction had to be heard, and when the court agreed, the case dismissed for lack of subject matter jurisdiction. Arbaugh v. Y & H Corporation, d/b/a The Moonlight Cafe (5th Cir. 8/2/04) [pdf].

To get there the Court had to wade through two thorny factual issues: (i) whether or not delivery drivers were employees or independent contractors under the economic realities test used to determine employee status for Title VII purposes, and (ii) whether under last year's Supreme Court decision in Clackamas Gastroenterology Associates., P.C. v. Wells, 538 U.S. 440(2003) the two owners of the corporation and their wives should be counted as part of the statutory 15. The answers, to the dismay of the plaintiff and her counsel who had obtained a favorable jury verdict, were: independent contractors and no. The bottom line, case dismissed - no subject matter jurisdiction. Several other circuits would at least go the other way on the basic issue of whether the 15 employee limit is jurisdictional, so it could be that this might see the light of day in the Supreme Court.

If you are a New Orleans fan, you might know The Moonlight Cafe, famous either as a favorite writing place of emergency room doc/author Dean Paschal, the best burger in New Orleans, or of course a Garden District favorite, which according to Gambit Weekly's restaurant guide "comes to the rescue of many a night owl, delivering barbecue ribs, cheese fries, gyros, burgers, salads, po-boys and even steaks into the wee hours. " Delivering, but not, as now certified by the 5th Circuit, with their own employees.

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